When I wrote Made in China
in December 2003 – almost 4 years ago, our trade deficit with that country was 121 billion dollars. Checking the latest figures through August of this year our deficit is 161 billion dollars. The only letter
I received on that article was from a gentleman who disagreed on everything I said and blamed our economic woes on our own government spending. I didn't respond to the letter, mainly because it was written with such authority in economics that I didn't quite know how to reply. Economics was not my strong suit in college.
For the past five months, my house has been under renovation. Many materials have arrived here during this time – and you guessed it – the majority of everything from nails to light fixtures was made in China. Now you would be living in a closet with a bunch of mushrooms not to notice China events that have made the news recently.
First, there was the dog food and toothpaste crisis. The Chinese equivalent to our head of the FDA was executed over the manufacturing of fatal products that arrived in our imports from that nation.
Second, there was the recall of faulty tires. Another major Chinese trade bureaucrat commits suicide.
Now, there is a hullabaloo about toys. Our rug rats maybe chewing Chinese made toys that contain lead.
Despite this, our hunger for Chinese made goods goes unabated.
Leading economic authorities including our Secretary of the Treasury
are worried about Chinese growth. I think they're not worried enough about it. The Bush Administration has never seen a foreign good that it didn't like.
In my 2003 article I pointed out that, the biggest beneficiary from the Chinese trade surplus was the Chinese military, namely the People's Liberation Army – the PLA. The percentage growth rate of the PLA exceeds the percentage growth rate of the overall Chinese economy.
People's Liberation Army is a misnomer. The PLA controls all the Chinese military forces including its Air Force and Navy. In September of this year, the commander of U.S. forces in Japan said that Chinese missile defense was almost impenetrable
except to the most modern U.S. fighter aircraft.
This morning a lunar orbiting satellite was launched by the Chinese in their race to the Moon
with other Asian powers. What is notable about this launch is a military test
being conducted in conjunction with it. A Chinese nuclear submarine will attempt to maneuver the lunar satellite from the sea. As it develops this technology, China will soon be capable of destroying or manipulating satellites at will. Earlier this year China destroyed a weather satellite without notifying anyone. This sent shock waves through the Pentagon.
If China developed the capacity to cripple our satellite fleet, the devastation would be worse than Katrina or the California fires put together. TV, communications, weather forecasting, hospitals, much of our business infrastructure would be affected. If you want to know how much, start counting satellite dishes - personal and commercial on your way to work.
Last week our problems with China just got worse. The Chinese leader, President Hu Jintao
was granted total control of the Chinese military. This is an unprecedented political move in China, one of the most drastic since the days of Chairman Mao Tse Tung. One man controls it all. For this to happen in the most populous country on earth is troubling, particularly since Chinese spying is on the increase.
We gradually slipped into this addiction with Chinese goods to the detriment of our own manufacturing processes. As with all addictions, withdrawal and rehabilitation are going to be a long painful process.
Until next time...